Europe’s AI rules may become India’s opportunity

India is considering enacting stand-alone legislation to regulate Artificial Intelligence (AI), but the European Union's (EU) AI Act, which came into force in August 2024 and became applicable on August 2, 2026, presents a potential challenge. The EU's Act is risk-based, prohibiting certain AI systems, regulating high-risk ones, and imposing lighter checks for limited-risk use cases.

This approach may not align with India's technology industry, which thrives on adaptive and responsive solutions. Unlike the EU's assumption that software, once built and approved, is sold as a finished product, India's industry typically evolves through continuous updates and improvements. Under the EU's Act, high-risk AI systems must undergo a conformity assessment, which includes testing, documentation, and human oversight.

However, if a substantial modification occurs, the process must be repeated. This distinction is crucial, as it may favor businesses with predictable product roadmaps. Indian firms, accustomed to adapting to client needs, may struggle to demonstrate compliance with future changes. Additionally, providers of modified high-risk AI systems could be held liable.

Despite these challenges, the Act also offers opportunities for India. The conformity assessment process requires the provision of governance measures, technical documentation, and testing regimes, which can generate demand for qualified professionals in India. Furthermore, the India-EU Free Trade Agreement includes provisions for regulatory cooperation, potentially allowing Indian conformity assessment bodies to participate in the EU's ecosystem.

For now, it remains to be seen whether the rules that may seem daunting to India will become a work it can sell to Europe.